Historical Sketch

The Spanish navigator Álvaro de Mendaña discovered the islands for the Europeans in 1595. They were re-discovered by James Cook in 1773, who proposed the name Hervey Islands. In the mid-19th century, the name Cook Islands became common. The Polynesian settlement of the islands began centuries before the arrival of the Europeans. In 1858, the local ruler of Rarotonga styled himself king, and in 1888, the kingdom petitioned to become a British protectorate to back off an impending French annexation. In 1900, in turn Great Britain annexed the islands and abolished the monarchy. Since then, the Cook Islands are a part of New Zealand, since 1965 as a self-governing associated state.

Monetary History Overview

In the 19th century, Latin American silver coins got imported through long distance trade, mainly Chilean Pesos (or "Dollars") became the current traders introduced. During the British protectorate the British currency was adopted by parliamentary act of 1894. The Chilean Dollars were demonetized but could be deposited and exchanged into specially issued government notes. The British annexation of 1900 and subsequent and New Zealand administration of 1915 did not change the monetary situation. When New Zealand introduced a distinct currency in 1933 and adopted the decimal system in 1967, the changes were also applied to the Cook Islands, and in 1972 began the issuance of local subsidiary coins that circulated alongside the New Zealand banknotes and coins. In 1981, the Cook Islands Monetary Board began operations as a supervisory institution, and the 1987 currency act transformed it into the issuing institute of the Cook Islands Dollar. The new currency was on par with the New Zealand Dollar, which kept its legal tender status. During the 1990s, the Monetary Board found it increasingly difficult to maintain the currency parity with the New Zealand Dollar, and several banks stopped accepting it in payments. In June 1995, the distinct currency was abandoned, and the New Zealand Dollar regained its sole legal tender status. The Cook Islands paper money was withdrawn except for the lowest denomination, while the local coins remained in circulation. The Monetary Board was dissolved in mid-2005.

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